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Single Family Housing Starts: Lowest Since 1991
Submitted by
CalculatedRisk on Thu, 07/17/2008 - 5:35am (13 comments)
I trimmed any "inusred" over $100K account last August!
Bring on the mass homebuilder BKs. No build equals no survive.
I guess the homebuilders and banks will rally for awhile time to buy shorts again soon. Just closed my positions over the last three days got hammered yesterday but fortunately took some profit the day before and bought a little insurance in calls for what I left behind. Love how Wells shot up 33% with basically crappy earnings.
I saw this headline on bloomber as soon as the numbers were released...JUMP IN STARTS DUE TO NEW NYC CONSTRUCTION CODE, COMMERCE SAYS...
By the way, a change in construction codes in NY City that went into effect on July 1 led to a big rise in multi-unit permits in June. Commerce doesn't (that I have seen so far) estimate the magnitude of that change. It is also not clear whether the distortion in multi permits spilled over into starts. Otherwise, the rise in multi starts suggests the impact from the NYC rule change was probably small. A 40%+ rise in multi starts is not all that rare. It also happened in January.
By the way, CR, some discussion of the disconnect between singles and multis might be useful. I know you've done it before, but if you look at under construction and completion figures for multis (both up y/y in June) and for singles (massive y/y fall) you get some feel for the leading nature of singles vs multis and of the impact of the longer planning and permitting timeline for bigger multis.
At some point we will overshoot our own pessimism. Sure, the overall drag will remain problematic for the next 12 to 16 months; however, at some point we will come to realize that (pent-up) demand will begin to outpace the available (stifled) supply.
At the tail end of this mess, there will be money to be made. So to the extent that the large builders can hang on (read: avoid BK), there's a mini-boom waiting in the wings. Of course, Obama may be finishing his first term by then, but our minds must capably look beyond the raucous pessimism so flagrantly spouted within these comments.
Dormilon strikes a wise, chin in hand pose to advise us that those who have been right all along are flagrantly spouting raucous pessimism. I'm all for looking ahead, and it have absolutely no bone to pick with the notion that a recover follows after a slump. The rhetorical claptrap with which that view is offered, though, adds nothing to the discussion. So far, the mainstream view here has been flagrantly spouting the correct view about housing, mortgages, the economy much that trouble with each of these implies for spending, jobs and stocks. If one's own point of view holds water, it is unnecessary to denigrate the so-far-accurate views of others.
By the way, Commerce has in fact estimated the impact of the NYC regulatory change, and it did hit starts as well as permits. Commerce estimates that starts would have fallen 4% in June, instead of rising 9%, had it not been for the regulatory change.
The residential construction employment chart?
Rhetorical claptrap? I just don't hear that so eloquently put as much as I should.
I enjoy this site and have for some time. Many of the responses over the past year have been a lot of back-slapping over the impending doom. I could not have agreed more with this conclusion and, indeed, have professionally provided a nearly identical view of the macroeconomy and housing, in particular, since early 2007.
My point is that we will overshoot our pessimism, not that this pessimism is misplaced. We would be wise to recognize now that nothing, not even our raucous pessimism, will continue unabated, and begin to consider the consequences. This is not a forum call to end the fun, nor am I predicting a sudden recovery, and I am especially not "denigrating" the views of those I share. However, the constant back-slapping is growing tiresome.
And if suggesting that we think through the other side of this downturn "adds nothing to the discussion," then what does?
Dormilon,
After having written that "I'm all for looking ahead, and it have absolutely no bone to pick with the notion that a recover follows after a slump", I am hard pressed to understand how you thing this applies --
"And if suggesting that we think through the other side of this downturn "adds nothing to the discussion," then what does?"
Not what I said. And if your view is that pessimism has not been misplaced, then what's with "raucous pessimism so flagrantly spouted within these comments"? I cannot read what you think, only what you write. What you wrote first read as a criticism of pessimism. Now, your view, as stated, is that pessimism is not misplaced. The whole "someday things will be different" thing is fine, but I am unaware of any real disagreement, even among the raucous unwashed.
Because the housing permits were hoarded in June, the housing starts numbers you see are entirely a phantom.
The NYC crane crashes must have toughened up regulation, so builders rushed to get as many old June permits as they could, and they'll use them throughout the year.
For the rest of the year, we'll have to ignore the totals, and just watch the single family data
Driving low housing starts is that the weak dollar and Asian demand keep running up raw material prices.
In the more US-centric world economies we had in 1950-2001, a big contraction in US home building would be enough reduce raw material prices.
Not now.
As I think I've noted here before, new residential construction in San Diego costs about $140-170 sf. In large portions of the county, however, prices are below this, making building unprofitable even if land is free, financing is free, and marketing/carrying/admin costs are 0.
Sorry bad link, reposting.
Because the housing permits were hoarded in June, the housing starts numbers you see are entirely a phantom.
The NYC crane crashes must have toughened up regulation, so builders rushed to get as many old June permits as they could, and they'll use them throughout the year.
For the rest of the year, we'll have to ignore the totals, and just watch the single family data